Saudi Arabia has typically focused its production cuts on its heavier barrels to maximize revenues, but its latest wave of supply curbs are so sizeable that its more lucrative medium and lighter grades – already facing intense competition from discounted Russian crude – will be significantly impacted, as well, reports Platts.
Crude Output Cuts
The OPEC+ kingpin on June 4 announced its latest surprise cut of 1 million b/d, to take effect in July, on top of existing 1.5 million b/d of output reductions it is already implementing. The July cut will take Saudi Arabia’s crude production to about 9 million b/d, its lowest since June 2021, and will come as domestic consumption is likely to peak due to power generation for air conditioning use in the summer.
In unveiling the cut at a press briefing after OPEC and its allies met in Vienna, Saudi energy minister Prince Abdulaziz bin Salman said he would leave refiners in “suspense” over how it w ould be apportioned among the country’s crude grades, which range from Arabian Super Light to Arabian Heavy.
Onshore fields are generally the source of Saudi Arabia’s lighter crudes, while offshore production mainly yields the medium and heavy grades.
Arab Light is the largest stream, with average production in 2022 of 5.42 million b/d. It is a medium sour grade, with a sulfur content of 1.96% and API gravity of 33.3, according to the Platts Periodic Table of Crude by S&P Global Commodity Insights.
Did you subscribe to our Newsletter?
It’s Free! Click here to Subscribe!
Source: Platts
